In recent years, Cabo's real estate market has exploded thanks to increased development, tourism, and foreign investment.

Owning Your Own Bit of Paradise Comes With Many Benefits

Los Cabos is one of the most beautiful and popular vacation destinations in the world. So it’s no surprise that people flock here from everywhere to enjoy the year-round beautiful weather, gorgeous beaches, and vibrant social life. If you are thinking of buying a vacation home in Los Cabos and renting it out while you’re away, here are a few of the perks of choosing such an investment.

Make Extra Money

The biggest benefit of owning a vacation property is the ability it gives you to earn extra income. Airbnb alone is very popular in Mexico. But dozens of vacation rental sites (including the popular Vrbo, formerly VRBO and HomeAway) have changed how people vacation. This new reality opens the door to new earnings, especially given the popularity of Los Cabos and everything the area has going for it. Many people would rather rent an entire home than a room in a hotel or a resort so that they can enjoy more privacy, security, and space. This is especially true of families with children.

In recent years, Cabo’s real estate market has exploded due to increased development and tourism, which has also been attended by an increase in foreign investment. The current return on investment in Los Cabos can be up to 60 percent.

Tax Considerations

Keep in mind that in June 2020, a new law was passed in Mexico that allows the government to tax expatriate rental income. The law requires you to declare income and pay taxes or face severe penalties. If you don’t live in your property full-time, as a nonresident of the country you’ll have to file when income is received. The good news is that Mexico has tax treaties with 32 countries, including the U.S. and Canada. This means that you won’t have to deal with double taxation; the taxes you pay in Mexico can be taken as credits when you are paying taxes in your native country as long as it is one of those 32 countries.

Also keep in mind that some local ordinances and homeowners’ associations may restrict the extent to which a property can be used for renting. A reputable local real estate agent should be able to help you navigate all relevant laws and regulations, including fideicomiso, tax nuances, and local rental laws.

Write Off Your Los Cabos Rental Home Expenses

In the United States, you can write off some of your expenses if you rent your home a certain number of days per month or year.

Similarly, if you rent out your home in Mexico for more than 14 days, the property is considered a business for tax purposes; and, with proper documentation, you can write off many of your expenses. These may include management fees, property and occupancy taxes, mortgage interest, utility costs, repairs, insurance premiums, depreciation, hosting fees charged by digital platforms like Airbnb, maintenance costs (for things like cleaning, lawn maintenance, and supplies), and other expenses.

We can recommend a local financial advisor or accountant who will help you maximize your deductions.

Your Home Away from Home . . . and Future Retirement Home in Cabo

It’s your home, so you’ll be able to use it any way you like. You’ll get to create new memories in the context of a stable, comfortable base surrounded by all your belongings. Imagine how great it will be to skip the chore of packing all the vacation gear every time you want to get away to Cabo. And you’ll already know the lay of the land; you will no longer be a tourist in a foreign country. Putting down roots in a new community can be very rewarding.

You’ve also bought your future retirement home. Do the legwork now and have your post-retirement lifestyle already settled and waiting for you. You are thus building a nest egg for yourself and your family while also securing peace of mind. Another plus: if you end up selling your first home after you retire, the profit from that sale could help you pay off the mortgage balance of your vacation home.

Buying a vacation home that you can rent out is a great way to build long-term wealth while ensuring that you’re taken care of when you retire. Meanwhile, enjoy some extra income and the beachfront life!

Let Us Help You Find the Perfect Cabo Property

The prospect of buying a vacation rental in another country can seem overwhelming. We make it manageable.

We’re a small, experienced team of local real estate experts who have lived, owned businesses, and worked in the real estate industry in Cabo for over ten years. We will help you find the perfect property for your needs and budget, the property that maximizes your income as a rental investor. We will help you navigate local rental regulations and market conditions, and we will answer any questions you have about our community.

Contact us anytime to get the process started.